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The Python docs faq says that due to a bug in Windows NT's cmd.exe, the output redirection and piping won't work when started from file extension.
http://docs.python.org/faq/windows.html#how-do-i-make-python-scripts-executable
http://docs.python.org/py3k/faq/windows.html#how-do-i-make-python-scripts-executable
This is actually fixed in Windows, but the fix is disabled by default, and you need to enable it in regedit, the keyword is "InheritConsoleHandles".
Proof & Details:
http://support.microsoft.com/default.aspx?kbid=321788
It would be great if the docs could refer to this fix, as the docs is the major source of information for many.

I've referenced the kb article in the docs. Please let me know if the fix is ok - maybe the whole registry change process should be included in the docs directly?

@dhgmgn I think the change is ok. That said, I add two things. 
It maybe should be noted which Windows version has this corrected.
The article contains this string: "This problem was first corrected in Microsoft Windows 2000 Service Pack 4. This problem was first corrected in Windows XP Service Pack 1".
The other thing is that I prefer if the relevant information is copied due to various reasons. One reason is that it serves as a "highlight" (nice time-saver and is also against TL;DR situations). Another is that Microsoft may simply cease support, or discontinue this link (they tend to do this).
I'm not familiar with how the python docs is constructed, if there is a style guide, etc., but I can tell that I'd be happy if I could see this information there directly. This is also how I've found out about that cmd header line/'trick'.
@<everyone>
Another thing, can anyone else confirm that this works for [s]he?
I've tested this on an 32-bit xp pro sp3.
When _not_ using the fix, something like `foo | myscript.py | bar` results in:
 IOError: [Errno 9] Bad file descriptor
With _using_ the registry fix from Microsoft, the command from above just works for me on the XP. (The cmd.exe/console needs to be restarted.)

This can be closed as "out of date" as extensive changes made to the Windows FAQ have removed the wording referenced in the patch.